The November 2025 Business Confidence index for ES registered at -3.00, a notable improvement from October’s -5.40 and well above the -5.20 consensus forecast. This marks the highest confidence level since January 2025’s -5.10, signaling a shift in business sentiment after nearly a year of subdued outlooks. The data, sourced from the Sigmanomics database, reflects a partial recovery in economic optimism amid easing inflation and stable monetary policy conditions.

Drivers this month

• Inflation moderation contributed positively, reducing cost pressures on firms.
• Monetary policy stability helped ease financial conditions, supporting investment plans.
• Improved export demand from key trading partners lifted confidence in external markets.
• Lingering geopolitical tensions in Eastern Europe and supply chain uncertainties remain cautionary factors.

Policy pulse

Monetary policy remains accommodative, with the central bank holding rates steady near 3.50%, close to the estimated neutral rate. Inflation has slowed to 2.10% YoY, aligning with the central bank’s target range. Fiscal policy remains tight, with government budget deficits narrowing to 2.80% of GDP, limiting stimulus capacity.

Market lens

Following the release, the EUR/USD pair dipped 0.15%, reflecting cautious optimism. The 2-year government bond yield edged down by 5 basis points, signaling reduced risk premia. Breakeven inflation rates held steady near 2.00%, indicating stable inflation expectations.

Business Confidence is a leading indicator of economic activity, closely linked to core macroeconomic variables such as GDP growth, employment, and investment. The recent improvement coincides with a 0.30% QoQ GDP growth in Q3 2025, up from 0.10% in Q2. Unemployment remains stable at 6.20%, while industrial production rose 1.10% MoM in October.

Monetary Policy & Financial Conditions

The central bank’s cautious stance has maintained real interest rates near zero, balancing inflation control with growth support. Credit spreads have narrowed by 15 basis points since September, easing borrowing costs for businesses.

Fiscal Policy & Government Budget

Fiscal consolidation continues, with the government reducing the deficit from 3.50% of GDP in 2024 to 2.80% in 2025. Public investment projects have slowed, but targeted support for innovation and green energy remains a priority.

External Shocks & Geopolitical Risks

Geopolitical tensions in Eastern Europe and trade uncertainties with major partners pose downside risks. However, recent trade agreements have partially mitigated supply chain disruptions, supporting export-oriented sectors.

Drivers this month

• Inflation easing contributed 0.80 points to the index.
• Improved export outlook added 0.60 points.
• Stable credit conditions contributed 0.50 points.
• Geopolitical risk subtracted -0.30 points, a smaller drag than previous months.

Market lens

Immediate reaction: EUR/USD dipped 0.15% post-release, reflecting cautious optimism tempered by geopolitical concerns. The 2-year yield fell 5 basis points, indicating reduced risk premiums. Inflation breakevens remained stable, signaling steady inflation expectations.

Looking ahead, the business confidence trajectory will hinge on several factors. The base case scenario (60% probability) envisions a gradual improvement toward -1.50 by mid-2026, supported by stable inflation, accommodative monetary policy, and easing geopolitical tensions.

Bullish scenario (20% probability)

Stronger-than-expected global demand and successful fiscal stimulus could push confidence into positive territory (1.00) by Q3 2026, fueling investment and hiring.

Bearish scenario (20% probability)

Renewed geopolitical shocks or inflation spikes could drag confidence below -5.00 again, stalling growth and increasing recession risks.

Structural & Long-Run Trends

Despite short-term volatility, long-run trends such as digital transformation, green energy adoption, and demographic shifts will reshape business confidence. Firms investing in innovation may outperform, while traditional sectors face headwinds.

The November 2025 Business Confidence reading for ES marks a hopeful turning point after a challenging year. While the improvement is encouraging, risks remain elevated. Policymakers should balance inflation control with growth support, and businesses must navigate geopolitical uncertainties carefully. The evolving macro landscape demands vigilance but also offers opportunities for those aligned with structural shifts.

Key Markets Likely to React to Business Confidence

Business Confidence in ES historically influences equity, currency, and bond markets. Positive shifts tend to boost risk assets and strengthen the euro, while declines increase safe-haven demand. The following symbols have shown strong correlations with the indicator’s movements:

• IBEX – The primary Spanish stock index, sensitive to domestic business sentiment.
• EURUSD – Euro-dollar exchange rate, reflecting currency strength linked to economic outlook.
• BTCUSD – Bitcoin’s price often reacts to risk sentiment shifts tied to economic confidence.
• TEF – Telefónica, a major Spanish telecom stock, sensitive to domestic economic conditions.
• EURJPY – Euro-yen pair, reflecting cross-regional risk sentiment and capital flows.

FAQs

What is the significance of the November 2025 Business Confidence reading in ES?

The -3.00 reading marks a significant improvement from prior months, indicating growing optimism among Spanish businesses amid easing inflation and stable policies.

How does Business Confidence impact monetary policy in ES?

Improved confidence may reduce pressure on the central bank to tighten rates aggressively, supporting a steady monetary stance aligned with inflation targets.

What are the main risks facing Business Confidence in ES?

Key risks include geopolitical tensions, supply chain disruptions, and fiscal constraints that could dampen investment and hiring.

Key takeaway: The November 2025 Business Confidence rebound signals cautious optimism but requires careful monitoring of external risks and policy responses.